Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Pilgrim’s Pride Corporation (NASDAQ:PPC).
Is PPC a good stock to buy now? Pilgrim’s Pride Corporation (NASDAQ:PPC) was in 18 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 28. PPC shareholders have witnessed an increase in hedge fund interest lately. There were 15 hedge funds in our database with PPC holdings at the end of June. Our calculations also showed that PPC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s take a look at the new hedge fund action surrounding Pilgrim’s Pride Corporation (NASDAQ:PPC).
Do Hedge Funds Think PPC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in PPC a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Pilgrim’s Pride Corporation (NASDAQ:PPC). AQR Capital Management has a $22.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On AQR Capital Management’s heels is Ken Griffin of Citadel Investment Group, with a $5.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions encompass Dmitry Balyasny’s Balyasny Asset Management, Noam Gottesman’s GLG Partners and Greg Eisner’s Engineers Gate Manager. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Pilgrim’s Pride Corporation (NASDAQ:PPC), around 1.74% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to PPC.
As one would reasonably expect, key hedge funds have been driving this bullishness. GLG Partners, managed by Noam Gottesman, established the biggest position in Pilgrim’s Pride Corporation (NASDAQ:PPC). GLG Partners had $3.1 million invested in the company at the end of the quarter. Ray Dalio’s Bridgewater Associates also initiated a $1.9 million position during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Pilgrim’s Pride Corporation (NASDAQ:PPC) but similarly valued. These stocks are Varonis Systems Inc (NASDAQ:VRNS), Hawaiian Electric Industries, Inc. (NYSE:HE), BOK Financial Corporation (NASDAQ:BOKF), Devon Energy Corporation (NYSE:DVN), Madison Square Garden Sports Corp. (NYSE:MSGS), Rayonier Inc. (NYSE:RYN), and Eagle Materials, Inc. (NYSE:EXP). All of these stocks’ market caps are similar to PPC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $442 million. That figure was $50 million in PPC’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Rayonier Inc. (NYSE:RYN) is the least popular one with only 17 bullish hedge fund positions. Pilgrim’s Pride Corporation (NASDAQ:PPC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for PPC is 28.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on PPC as the stock returned 36.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.